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Easy Fella!


We barely saw any hedging yesterday?!?


"Oh I like this one... One dog goes one way, the other dog goes the other way, and this guy's sayin', "Whadda ya want from me?'"

Tommy DeVito, Goodfellas

Good morning and welcome back to the scorning. The ursine arrived in the 'Ville yesterday and smacked the bovine into pure disarray. The selling was fierce from the opening bell and weighed on the tape 'till we bid you farewell. "The Minx has been living a life artificial," said Boo from his perch as the ursine official, "and while you might find my take prejudicial, I think that you'll find it most beneficial!" Have the big picture blues become front page news or will Hoofy escape from this most recent bruise? We'll know soon enough so get ready to jump as we roll up our sleeves for the holiday Hump!

Reactive rationalization is a common phenomenon when trading as there will always be reasons to assign to the rhyme. When the tape rallies, the mainstream media giggles with excitement and makes you feel silly for not seeing the light. When the supply arrives, they are equally adamant that the writing was on the wall and we've seen this script before. The simple truth is that competing dynamics are in place each day and while there are always new inputs to the equation, a thorough assimilation will paint the probability spectrum.

After three months of ups, downs and all arounds, we find ourselves asking "what now?" I attempted to address that question last week in the context of time horizon. The near-term was fraught with obstacles (toppy stochastics, looming resistance, non-confirmations) but folks still seemed stuck in the muck when the red rain started to fall. And while the financials, breadth and lopsided sentiment remain thorns in Snapper's side, we should remember that there are always two sides to every trade. See them both even if you decide to place one-sided bets.

The prospect of an intermediate-term lift (blow-off top?) remains in place although it may be A) dancing between the elephants and B) a bit premature to consider. Still, as some of the foam has been blown off the brew, we gotta keep our eyes open for hard left turns. Remember, up until yesterday, a sluggish dollar was equity friendly and it took the specter of foreign diversification to decouple the two. That variable remains invisible and you have a slap happy Fed backed into the corner. I have little doubt how this will (not well) end but a few years of equity enemas has me peering over my shoulder.

The wildcard remains the collective psychology and that is precisely why there is no set script. Case in point is Aunt Fannie (FNM) and her main squeeze Franklin. We've been discussing their problems for years but it sat atop the "pay no mind" list until last month. Now, all of a sudden, it "matters" because the stock is 19% lower and politicians are distancing themselves from the scandal. I sense that we'll see the same "mental migration" from the Fed as the air is let out of the psychology bubble. It won't be easy and it won't be pretty but it also won't be a straight line. Hunker down, Minyans, and dig in for the long haul if you're gonna dig in at all.

We power up the Hump Day pup to find Europe and Asia dancing with redheads, the greenback grabbing some green back, metals exhaling and the stateside futures flattish. All eyes will be on Elmer at 8:30 EST to see if the uptick in inflation was passed through to the consumer. One number does not a market make but if yesterday did anything, it planted a seed in the mindset of the masses. With the aforementioned psychology such an integral metric, we must respect the power of perception and factor that into our mix.

Good luck today.


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